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101 days later: Rendell signs budget

October 9, 2009 9:35:04 PM PDT
Gov. Ed Rendell and the politically divided Legislature finally signed off on a state budget Friday night, resolving a multibillion-dollar, recession-driven shortfall and ending Pennsylvania's 101-day budget stalemate, the nation's longest this year. Rendell and top legislators acknowledged that the inexcusable delays in negotiating the state's $27.8 billion spending plan would overshadow what they otherwise defended as a strong budget that protects crucial services amid the state's worst shortfall since the Great Depression.

Just before 9 p.m., Rendell signed the key pieces of the spending plan - the primary appropriations bill and a companion bill tapping more than $1.5 billion from the state's reserves - after a flurry of votes in the House and Senate. In a somber news conference, he also promised quick action to move money to school districts and social services providers that were left to fend for themselves and their wards without the billions of dollars in state subsidies on which they normally rely.

"I believe there is no reason to celebrate the signing of the budget," Rendell told reporters. "That's not because it isn't a good budget, and it is, it's a responsible budget and it does good things for the state of Pennsylvania. But it took entirely too long. There's no excuse for us having put the people of Pennsylvania, many of whom depend desperately upon the services we provide, to put them through over three months of waiting."

Senate Majority Leader Dominic Pileggi, R-Delaware, sounded many of the same notes, but pointed to some inevitable factors, including the recession, as well as Rendell's ambitious goals and an inexperienced House leadership.

"I think there's a sense of fatigue and disappointment that the process took so long," Pileggi said. "I think that overshadows that fact that the budget is one that is a sound budget, from fiscal standpoint, and I think a well-crafted budget that positions us well for the recovery in the state's economy and the nation's economy."

Many advocates for the poor were disgusted by the delay in money for services. However, given the state's huge shortfall, advocates for children, hospitals, the environment and others were cheered by a budget that they say could have brought far worse consequences.

Overall, the appropriations bill cuts spending by more than 1 percent, while boosting spending on operations and instruction in public schools by $300 million, or 5.7 percent, a level Rendell insisted upon. It does not raise the state tax rates on sales or income, Pennsylvania's two biggest sources of revenue. Some strings are still hanging loose.

Negotiations on one puzzle piece of the budget - the legalization of table games at slot-machine casinos - were expected to drag into next week because of lingering disagreements between the House and Senate.

Poker, blackjack and other games are expected to produce $200 million in taxes and fees for the state treasury, forcing the hold up of $700 million in discretionary funding for universities, museums and others to ensure a balanced budget, officials said.

The money could be authorized once a table games bill passes. On the way to this agreement, Democrats fought off efforts by Republicans to make deeper cuts in spending, while Republicans resisted calls by Democrats to increase the income tax. Two previous handshake deals among budget negotiators fell apart, leaving raw feelings in the Capitol.

The hard-fought budget relies on a blend of federal budget aid, transfers from reserve funds, spending cuts and nearly $500 million in new taxes on businesses that pay the capital stock and franchise tax and sales of cigarettes and little cigars.

The plan also relies on leasing more state forest land to natural gas exploration companies - a provision that drew heated criticism from environmental advocates.

House Republicans were the only caucus to oppose the agreement, protesting unwise tax increases that they say push spending to unsustainable levels. Groups that represent hospitals, doctors and horse breeders also protested plans to divert money from reserves that benefit their members.

Meanwhile, staff members in the governor's budget office and the Treasury Department were prepared to work through the weekend to speed payments as quickly as possible to schools, local governments and services providers that rely on the billions of dollars in state subsidies that have been delayed.

Without the money, counties, school districts and the private organizations and businesses that deliver many of Pennsylvania's social services to the poor are borrowing money, putting off bills, laying off workers and cutting services.

Many day-care agencies closed, many preschools did not reopen in the fall and people waited longer for services, such as mental health counseling.

On Aug. 5, Rendell signed a $12.8 billion partial budget to ensure that paychecks flowed to tens of thousands of state employees, government offices and state prisons remained open and health care for the poor, disabled and elderly stayed intact.

But, unhappy with GOP refusals to agree to allow more spending, he vetoed nearly $13 billion that had been endorsed by Republicans for social services, school subsidies and more in an attempt to pressure them to authorize more money for those programs.

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Senate budget vote: http://tiny.cc/iuuZ2

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